Correlation Between Eagle Financial and Northeast Indiana

Can any of the company-specific risk be diversified away by investing in both Eagle Financial and Northeast Indiana at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Eagle Financial and Northeast Indiana into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eagle Financial Services and Northeast Indiana Bancorp, you can compare the effects of market volatilities on Eagle Financial and Northeast Indiana and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Eagle Financial with a short position of Northeast Indiana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Financial and Northeast Indiana.

Diversification Opportunities for Eagle Financial and Northeast Indiana

0.07

Correlation Coefficient

Eagle Financial  Northeast Indiana

Significant diversification

The 3 months correlation between Eagle and Northeast is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Financial Services and Northeast Indiana Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast Indiana Bancorp and Eagle Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Eagle Financial Services are associated (or correlated) with Northeast Indiana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Indiana Bancorp has no effect on the direction of Eagle Financial i.e., Eagle Financial and Northeast Indiana go up and down completely randomly.

Pair Corralation between Eagle Financial and Northeast Indiana

If you would invest  3,340  in Eagle Financial Services on September 15, 2024 and sell it today you would earn a total of  220.00  from holding Eagle Financial Services or generate 6.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Eagle Financial Services  vs.  Northeast Indiana Bancorp

Eagle Financial Services

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Financial Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Eagle Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Northeast Indiana Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northeast Indiana Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Northeast Indiana is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eagle Financial and Northeast Indiana

The main advantage of trading using opposite Eagle Financial and Northeast Indiana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Financial position performs unexpectedly, Northeast Indiana can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Northeast Indiana will offset losses from the drop in Northeast Indiana's long position.

The idea behind Eagle Financial Services and Northeast Indiana Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.